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Why Does Steel Price Trend Be Blind In The Low Season?
Jan 18, 2018

High temperature in June and July the rainy and not as many people in the market expected weakening demand for steel, after pressing the price of steel rebar spot price index in June after a narrow range of adjustment, in a wave of rising prices began in late June and early July, and hit a new high of 3938.59 yuan / ton years in today.

Why does the screw steel show such a bright eye in the traditional off-season? How will it be deductive after a new year's high? The next I will explain.Brass Brush Custom Cnc Machining Parts Bulk Production


The author thinks that the main driving factors of high innovation steel spot price index in the off-season has two points, first, the tight balance between supply and demand leads to low inventory; second, capital than expected easing background, the screw drives the repair spot price basis.

1, low inventory caused by tight supply and demand balance


The first half of this year to clear the bar activities in an orderly manner, the end of June production capacity of 1.2 tons of intermediate frequency furnace and electric arc furnace was eliminated, as expected, thread supply shrinking, at the same time, infrastructure and real estate investment remained relatively high growth support thread needs, the role of two threads under the tight balance between supply and demand, inventories continued to decline, remain low. Steel mills and traders occupy the advantage of low stock, strong state of mind, and push the steel price up.Metal Stainless Steel Brush Part Bulk Production

2, poor repair market


In the past two months, the central authorities' actions to prevent liquidity tightness occurred, and precise liquidity was launched, breaking the expectation of tight funding in early stage, and the market liquidity is relatively loose. For a good basic thread, high base difference also needs to be repaired, the situation was favourable for the bulls, and the money to enter the futures market, on basis of snail repair market, and then drive the stock rose.


At present the current thread basis has been significantly restored, the late thread price trend will depend on how changes in inventory. I think late inventory is difficult to accumulate, even if inventory accumulation, the extent will be more limited, steel prices still go up space. The main basis is as follows.Hardware Zinc Alloy Brush Product Bulk Production

1. Limited supply side


(1) the release of electric arc furnace is limited. On the one hand, the state strictly controls "Zhong" to "electricity", and strictly prohibits the new EAF production capacity. On the other hand, the domestic electric furnace technology is backward, and the related supporting equipment is not perfect, and the later production of EAF is relatively limited.


(2) the utilization rate of the blast furnace capacity has been reached to the upper limit. As shown in Figure two, at present, the utilization of blast furnace capacity that does not contain the elimination capacity is as high as 90%, and the space for re production is very limited.

2, capital construction and real estate investment performance is better, thread demand is more stable


From the recent statistics published data, the first half of the infrastructure investment is still maintained at a relatively high level, strong toughness and real estate investment, real estate development investment 1-6 cumulative year-on-year growth of 8.5%, still living in a high level. The good performance of the two supports the needs of the thread.CNC Turning Titanium Brush Product Bulk Production


Based on the above two points, I think the tight supply pattern of thread supply will still be maintained. Later inventory is difficult to accumulate. Even if the cumulative extent is limited, thread steel will go out of the off-season market.



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